May 24 (Bloomberg) -- Target Corp. and Macy’s Inc. joined
with 15 other retailers in suing Visa Inc. and MasterCard Inc.
over credit-card and debit-card fees after dropping out of a
multibillion-dollar settlement of a similar case.

The biggest U.S. payment card firms illegally restrained
competition for interchange fees by setting default rates and
imposing almost identical rules for accepting cards, the
retailers said yesterday in a federal court complaint in New
York.

In the previous antitrust suit pending in Brooklyn federal
court, dozens of large retailers including Target and Macy’s
opposed a $7.25 billion proposed settlement, alleging it gave
Visa and MasterCard too much freedom to raise rates in the
future.

“Plaintiffs have paid and continue to pay significantly
higher costs to accept Visa-branded and MasterCard-branded
credit and debit cards than they would if the banks issuing such
cards competed for merchant acceptance,” lawyers for the
retailers said in yesterday’s complaint.

Visa, based in Foster City, California, and MasterCard,
based in Purchase, New York, are former joint ventures of major
banks that now act as agents of financial institutions that
retain some ownership of the card companies, the retailers
alleged.

A separate group of retailers opposing the settlement,
including Wal-Mart Stores Inc. and Costco Wholesale Corp.,
announced May 21 they would opt out and might file their own
lawsuits.

The settlement in Brooklyn, estimated to be the largest-ever U.S. antitrust accord, was intended to cover more than 7
million retailers nationwide. Several retail trade associations
also opposed the accord and encouraged other merchants to do the
same.

The settlement received tentative approval from U.S.
District Judge John Gleeson in November. A hearing on final
approval is set for Sept. 12.

A spokeswoman for the Electronic Payments Coalition, which
represents Visa, MasterCard and banks and credit unions that
issue payment cards, said “no one is surprised” by the
retailers’ new lawsuit.

‘Old Arguments’

“They were saying they were going to do this for nearly a
year now,” Trish Wexler, the spokeswoman, said in a phone
interview. “I find it hard to understand why they think they
could do any better with a new lawsuit using the same old
arguments that they’ve already exhausted over the course of this
litigation.”

The coalition is confident that the settlement will receive
final approval, she said.

A MasterCard spokesman, James Issokson, said in an e-mail
that the firm is also confident that Gleeson will sign off on
the deal. Paul Cohen, a Visa spokesman, declined to comment
immediately.

K. Craig Wildfang, a lead lawyer for plaintiffs in the
settlement, said the new suit probably won’t have a significant
impact on approval. The credit card companies and other
defendants might ask to have the new suit transferred to Gleeson
in Brooklyn, he said.

The new case is Target Corp. v. Visa Inc., 1:13-cv-03477,
U.S. District Court, Southern District of New York (Manhattan).
The previous case is In re Payment Card Interchange Fee and
Merchant Discount Antitrust Litigation, 05-md-01720, U.S.
District Court, Eastern District of New York (Brooklyn).